(Cite as: 51 FR 36453)
NOTICES
DEPARTMENT OF COMMERCE
[C-583-509]
Final Negative Countervailing Duty Determination: Porcelain-on-Steel Cooking Ware From Taiwan
Friday, October 10, 1986
*36453 AGENCY: Import Administration, International Trade Administration, Commerce.
ACTION: Notice.
SUMMARY: We determine that no benefits which constitute subsidies within the meaning of the countervailing duty law are being provided to manufacturers, producers, or exporters in Taiwan of porcelain-on-steel cooking ware. The estimated net subsidy is 0.17 percent ad valorem. This rate is de minimis, and, therefore, this determination is negative. We have notified the United States International Trade Commission (ITC) of our determination.
EFFECTIVE DATE: October 10, 1986.
FOR FURTHER INFORMATION CONTACT:Laurel LaCivita or Loc Nguyen, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NE., Washington, DC 20230; Telephone: (202) 377-0189 (LaCivita) or (202) 377-0167 (Nguyen).
SUPPLEMENTARY INFORMATION:
Final Determination
Based upon our investigation, we determine that certain benefits which constitute subsidies within the meaning of section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers, or exporters in Taiwan of porcelain-on-steel cooking ware. For purposes of this investigation, the following programs are found to confer subsidies:
- Preferential Export Financing
- Income Tax Ceiling of 25 Percent for Big Trading Companies
We determine the estimated net countervailable benefits for porcelain-on-steel cooking ware to be 0.17 percent ad valorem. Although we have determined these programs to be *36454 countervailable, the respondent received de minimis benefits during the review period. Therefore, we determine that no benefits which constitute subsidies within the meaning of Section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers, or exporters of porcelain-on-steel cooking ware in Taiwan.
Case History
On December 4, 1985, we received a petition in proper form filed by the Porcelain-on-Steel Committee of the Cookware Manufacturers Association and the General Housewares Corporation. In compliance with the filing requirements of s 355.26 of the Commerce Regulations (19 CFR 355.25), the petition alleged that manufacturers, producers, or exporters of porcelain-on-steel cooking ware in Taiwan receive, directly or indirectly, subsidies within the meaning of section 701 of the Act, and that these imports materially injure, or threaten material injury to, a U.S. industry.
We found that the petition contained sufficient grounds upon which to initiate a countervailing duty investigation and on December 24, 1985, we initiated an investigation (50 FR 53354, December 31, 1985). We stated that we expected to issue a preliminary determination by February 27, 1986.
Since Taiwan is entitled to an injury determination under section 701(b) of the Act, the ITC is required to determine whether imports of the subject merchandise from Taiwan materially injure, or threaten material injury to, a U.S. industry. Therefore, we notified the ITC of our intention. On January 16, 1986, the ITC determined that there is a reasonable indication that imports of porcelain-on-steel cooking ware from Taiwan materially injure a U.S. industry (51 FR 3862, January 30, 1986).
On January 3, 1986, we presented questionnaires concerning the petitioners' allegations to the American Institute in Taiwan in Washington, DC. The authorities on Taiwan, First Enamel Industrial Corporation (First Enamel), Tou Tien Metal (Taiwan) Co., Ltd. (Tou Tien), Tian Shine Enterprise Co., Ltd. (Tian Shine), Lin-Fong Industrial Co. Ltd. (Li-Fong), and Four Star International Trading Company (Four Star) responded to the questionnaire on February 6, 1986. Li-Mow Enamelling Co., Ltd., responded on February 18, 1986, and Tou Tien amended its original response on that date.
We received a timely request for exclusion from any countervailing duty order from Four Star, an exporter of porcelain-on-steel cooking ware from Taiwan, who indicated that they receive no benefits under the countervailing duty law. On February 14, 1986, the Department requested that the authorities on Taiwan certify whether Four Star received any benefits from the programs under investigation.
On February 27, 1986, we issued our preliminary negative determination (51 FR 7982, March 7, 1986).
Verification was conducted in Taiwan from March 4 to March 26, 1986.
On March 14, 1986, Collins Co., Ltd., D&J Industrial Co., Ltd., Grand Unique Trading Co., Ltd., Sanyei Corporation (Taiwan) Ltd., Trans-World Prosperity Corporation and Trans-World Associates, Inc., which were previously unknown to petitioners or to the Department as manufacturers, producers or exporters of the products under investigation, filed responses to the Department's questionnaire.
On March 10, 1986, petitioners filed a request to extend the deadline date for a final determination in the countervailing duty investigation to correspond to the date of the final determination in the antidumping investigation.
Section 705(a)(1) of the Tariff Act of 1930, as amended by Section 606 of the Trade and Tariff Act of 1984, (Pub. L. 98-573, provides that when a countervailing duty investigation is "initiated simultaneously with an [antidumping] investigation . . . which involves imports or the same class or kind of merchandise from the same or other countries, the administering authority, if requested by the petitioner, shall extend the date of the final determination (in the countervailing duty investigation) to the date of the final determination in the antidumping investigation (19 U.S.C. 1671d(a)(1))." Pursuant to this provision, the Department granted an extension of the deadline for the final determination in the countervailing duty investigation of porcelain-on-steel cooking ware from Taiwan to July 28, 1986, the original deadline for the final determination in the antidumping investigation.
On May 16, 1986, counsel for respondents in the antidumping duty investigation of porcelain-on-steel cooking ware from Taiwan requested that the Department postpone the final determination until not later than 135 days after the preliminary determination in accordance with section 735(a)(2) of the Act. We granted this request and postponed our final antidumping duty determination until not later than October 2, 1986. Pursuant to section 705(a)(1) of the Tariff Act of 1930 as amended by section 606 of the Trade and Tariff Act of 1984, the deadline for the final countervailing duty determination on porcelain-on-steel cooking ware from Taiwan was also postponed until October 2, 1986, to coincide with the revised date of the final antidumping duty determination (51 FR 15519, April 24, 1986).
Our notice of preliminary determination gave interested parties an opportunity to submit oral and written views. A hearing was not held because no interested party requestred one in this case.
On August 27, 1986, petitioners requested the Department to examine whether the authorities on Taiwan conferred a subsidy on the manufacturers, producers, or exporters of porcelain-on-steel cooking ware by the excessive remission of duty drawback on the steel used in the production of the merchandise under investigation. On September 12, 1986, respondents replied to petitioners' August 27, 1986, comments.
This allegation was first filed five months after verification and one month prior to the final determination. Section 355.39 of the Commerce Regulations specifies that all information used in making a final determination shall be verified. Because this information was submitted too late to be investigated and verified, the Department considers this allegation to be untimely and did not consider it in making its final determination.
Scope of Investigation
The products covered by this investigation are porcelain-on-steel cooking ware, including teakettles, which do not have self-contained electric heating elements. All of the foregoing are constructed of steel, and are enameled or glazed with vitreous glasses. These products are provided for in items 654.0815, 654.0824, and 654.0827 of the Tariff Schedules of the United States Annotated (TSUSA). Kitchenware, currently provided for under item 654.0828 of the TSUS, is not subject to this investigation.
Analysis of Programs
Throughout this notice, we refer to certain principles applied to the facts of this investigation. These principles are described in the "Subsidies Appendix" attached to the notice of "Cold-Rolled Carbon Steel Flat-Rolled Products from Argentina; Final Affirmative Countervailing Duty Determination and Countervailing Duty Order," which was published in the April 24, 1984, issue of the Federal Register (49 FR 18006).
For purposes of this final determination, the period for which was are measuring subsidies (the review period) is calendar year 1984.
*36455 Based upon our analysis of the petition, the responses to our questionnaires, the verification, and the amended responses submitted after verification, we determine the following:
I. Programs Determined To Be Countervailable
We determine that subsidies are being provided to manufacturers, producers, or exporters in Taiwan of porcelain-on-steel cooking ware under the following programs:
A. Preferential Export Financing
The Export Loan Discount Regulations of the Central Bank of China permit registered exporters in possession of a letter of credit to apply for low-cost export loans covering up to 85 percent of the value of the export transaction. Export loans are arranged through authorized foreign-currency banks, which may apply for an interest-rate reduction from the Central Bank. Exporters settle the loan with foreign exchange within 180 days or pay an interest-rate penalty on the full amount of the loan.
The Central Bank sets the maximum and minimum interest rates for commercial lending in Taiwan. Export loans were set at rates equal to or below the minimum rates established for commercial lending during the review period. Because the rates given by commercial banks are near the maximum interest rate set by the Central Bank and because no further information is available regarding average commercial lending rates in Taiwan, we used the maximum lending rates set by the Central Bank as our short-term commercial benchmark.
Collins Company, Ltd., obtained export loans to finance exports of the products under investigation to the United States. Because these loans are contingent upon export performance and provide funds to borrowers at interest rates lower than those available for other purposes, we determine that this program confers a benefit which constitutes an export subsidy.
To calculate the benefit, we compared the Central Bank's export-loan rate with its maximum short-term loan rate. We then multiplied the difference by the principal amount and allocated the benefit over the value of Collins' 1984 exports to the United States of the products under investigation. The estimated net subsidy is 0.0073 percent ad valorem.
B. Preferential Income Tax Ceiling of 25 Percent for Big Trading Companies
Article 15 of the SEI permits productive enterprises and big trading companies to pay no more than 25 percent corporate income tax on income exceeding NT $500,000, rather than the 35 percent required by Taiwan's graduated corporate income tax law.
In previous cases, we grouped the tax benefits granted to big trading companies under this program with the income tax ceiling granted to productive enterprises. We determined that the 25-percent income tax ceiling granted to productive enterprises did not provide countervailable benefits because benefits were not limited to a specific enterprise or industry, or group of enterprises or industries. However, at verification, we learned that big- trading-company status is granted to companies which meet the following criteria established by the Ministry of Economic Affairs:
1. Earn annual export income according to the following schedule:
1983--20 million US dollars,
1984--20 million US dollars,
1985--50 million US dollars,
1986--100 million US dollars,
1987--to be established;
2. Maintain outstanding capital in excess of NT$200 million;
3. Operate only an export-import business;
4. Maintain overseas subsidiaries in more than three countries.
Six trading companies in Taiwan met this criteria in 1983, four in 1984 and 1985, and three in 1986.
The criteria established by the Ministry of Economic Affairs clearly indicates that the preferential tax treatment extended to big trading companies is based on export performance. Therefore, we determine that this program confers a benefit which constitutes an export subsidy.
Collins Company, Ltd., calculated its tax payable at the 25-percent rate. To calculate the subsidy, we allocated the tax savings resulting from the difference in the 25- and 35-percent rates over the value Collins' export sales. The estimated net subsidy is 0.1610 percent ad valorem.
II. Programs Determined Not To Be Used
We determine that the following programs have not been used by the companies that manufacture, produce, or export porcelain-on-steel cooking ware in Taiwan:
Article 31 of the Statute for Encouragement of Investment (SEI) permits exporters to establish an export loss reserve of up to one percent of the previous year's export exchange settlement to be used exclusively to compensate for export losses. Companies treat the export loss reserve as a business expense and deduct it from taxable income in one year, then settle the account and carry the reserve funds forward as taxable income for the next year.
Because this program is contingent upon export sales, we determined this program to be countervailable in the preliminary determination. We calculated a rate based on information provided by Tian Shine for the wrong year. However, at verification, we found that neither Tian Shine nor any of the other respondents received benefits from the export loss reserve program in calendar year 1984.
Therefore, we determine that this program was not used during the period of investigation.
B. Preferential Income Tax Ceiling of 22 Percent
Article 15 of the SEI also permits capital-intensive and/or technology- intensive enterprises engaged in the basic metal production industry, heavy machinery industry, or petrochemical industry to use a marginal tax rate of no more than 22 percent. We verified that none of the companies under investigation used the 22-percent tax ceiling during the period of investigation.
C. Accelerated Depreciation and Tax Holiday
Article 6 of the SEI permits newly-established productive enterprises either to use accelerated depreciation on fixed assets machinery and equipment or to select a five-year holiday on corporate income taxes. In addition, expanding enterprises may participate in a four-year tax-holiday on increased profits from expansion or a rapid depreciation of newly purchased buildings or equipment. We verified that none of the companies under investigation either claimed accelerated depreciation or took a tax holiday during the period of investigation.
D. Duty Exemptions and Deferrals on Imported Equipment
Article 21 of the SEI allows productive enterprises to pay import duties on selected machinery and equipment in a series of installments beginning one year from the date of importation. In addition, qualified enterprises are exempt from import duties on selected machinery and equipment used for the establishment or expansion of an approved project or for research and development. We verified that none of *36456 the companies under investigation received duty exemptions or deferrals during the period of investigation.
E. Preferential Long-Term Loans
Article 84 of th SEI permits the Executive Yuan to establish and administer a special development fund to promote investments of interest to national economic development. We verified that none of the companies under investigation received Article 84 financing with respect to U.S. sales of the products under investigation.
Verification
In accordance with 776(a) of the Act, we verified the data used in making our final determination. We conducted verification in Taiwan from March 4 through March 26, 1986. During verification, we followed normal verification procedures, including meeting with government officials and inspection of documents, as well as on-site inspection of the companies producing and exporting the merchandise under investigation to the United States.
Administrative Procedures
We afforded interested parties an opportunity to present information and written views in accordance with Commerce regulations (19 CFR 355.34(a)). None of the interested parties requested a hearing. Therefore, a hearing was not held in this investigation.
ITC Notification
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. Since this determination is negative, the investigation will be terminated upon the publication of this notice in the Federal Register. Hence, the ITC is not required to make a final injury determination.
This notice is published pursuant to section 705(d) of the Act (19 U.S.C. 1671d(d)).
Paul Freedenberg,
Assistant Secretary for Trade Administration.
October 2, 1986.
[FR Doc. 86-23033 Filed 10-9-86; 8:45 am]
BILLING CODE 3510-DS-M